Growth in the market for surgical robots used in hip and knee orthopedic procedures was forecasted at $222 million in 2015 with anticipated growth to reach $5 billion by 20221 (Table 1). A substantial number of next- generation robotic devices, systems, and instruments are being introduced to manage surgery to the best possible outcomes.

Why This Is Important
Most leading firms have joined the surgical robotics race through organic development, acquisition, or partnership. Details and claims on the technological advancements involved with each of these companies are impressive. For example, Stryker (Mako) claims that its robotic-arm assisted technology—used in partial knee, total hip, and total knee procedures—has reduced overall readmission costs by 66 percent.2

Zimmer Biomet is developing the Rosa system, acquired when it purchased the French company Medtech SA. Zimmer Biomet claimed the Rosa system would be launched in 2018, but no announcements have been made yet.

Navio is a Smith & Nephew robotics system that claims an exclusive handheld robotic surgical tool for knee replacement surgery, designed to precisely remove the bone identified by the surgeon in a patient-specific plan. The robotic handpiece can be used with Smith & Nephew knee implants designed to work with the Navio.

Medtronic has invested in Mazor Robotics, which develops robotics for use in spine procedures. The company’s Mazor X has been used in over 1,000 surgeries in more than 50 hospitals within the U.S.4

What’s the Surgical Robotics Granddaddy Doing About This?
With an impressive global footprint in robotics systems and thousands of da Vinci systems installed (Table 2), Intuitive Surgical (IS) could cause its orthopedic robotics competitors a world of hurt. IS is quiet about its plans for orthopedics, but the competencies of the company are well aligned with the needs of orthopedic surgeons—improved dexterity, new capabilities in hand-eye coordination, ergonomics, imaging through computed tomography scans, and preoperative planning and simulation software.

Table 2: Global Installed Base of da Vinci Systems5,6

Many of us who have presented other, non-robotic medical devices to hospital Value Analysis Committees swore that robots and their proprietary accessories could not be sold at the huge price premium IS was demanding. Mock no more. IS has had 16 quarters of profitable growth, and analysts predict this trend to continue well past 2020.6

What Is the Value Proposition?
At the annual J.P. Morgan Healthcare Conference in January 2018, Intuitive Surgical returned to its original value proposition5—a reduction in variability in surgeon skill; it noted the bottom quartile of surgical skill leads to approximately three times more complications and approximately two times the increase in readmission rates than the top quartile.

Robotics manufacturers know new product development in this space demands human factors research to provide reproducible surgical outcomes without the steep learning curve traditionally seen with the launch of new medtech. IS offers virtual reality simulators for training to help surgeons be successful for the first real procedure.

Robotics won’t make surgeons obsolete, though. Surgeons who have made the switch see the robot as a new tool that gives them confidence in performing difficult procedures. The IS value proposition is clear: “Our products are designed to decrease variability in surgery by offering consistency in functionality and user-experience with dependability for surgeons seeking better outcomes.”5 Robotics can replace or reduce repetitive tasks that can make surgery into a marathon. Autonomous robotic surgery (surgery performed at a distance from the patient) holds the promise of greater efficacy, safety, and a new world of optimized surgical techniques (Table 3).

Table 3: Estimated Global Sales for Surgical Robotics Systems7

IS is depending upon its large global footprint to maintain and sustain its value proposition. In the IS 2017 annual report, the company cites strong growth (greater than 23 percent) in Europe, Japan, Korea, and China (Table 4). Further, the company estimates in its report that in 2017, surgeons completed approximately 877,000 surgical procedures of various types in hospitals throughout the world using its technology.

Robust Price Strategies Are Critical
Bringing new medical devices to market is expensive. A conjoint analysis can help medtech companies compare high-end features and the price premiums they can command. There are many other methodologies that are not as expensive as a conjoint that can help reduce risk and improve medtech sales prior to launch.

The Medi-Vantage Perspective
Forbes has estimated IS sales by year-end 2018—approximately $955 million in systems, $1.93 billion in instruments and accessories, and $634 million in services.9 At greater than a 70 percent gross margin, this medical device pricing strategy is working well for the firm, one that required significant thought, vision, and strategy research.

Maria Shepherd has more than 20 years of leadership experience in medical device/life-science marketing in small startups and top-tier companies. After her industry career, including her role as vice president of marketing for Oridion Medical where she boosted the company valuation prior to its acquisition by Covidien/Medtronic, director of marketing for Philips Medical, and senior management roles at Boston Scientific Corp., she founded Medi-Vantage. Medi-Vantage provides marketing and business strategy as well as innovation research for the medical device industry. The firm quantitatively and qualitatively sizes and segments opportunities, evaluates new technologies, provides marketing services, and assesses prospective acquisitions. Shepherd has taught marketing and product development courses and is a member of the Aligo Medtech Investment Committee (www.msbiv.com). She can be reached at 855-343-3100, ext. 102, or at mshepherd@medi-vantage.com. Visit her website at www.medi-vantage.com.

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